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Catherines Chat

Wholistic Financial Solutions provides a lot of essential information and updates regarding the property investment industry. Check this page for the updates.

Capital City mediun prices remain flat - though Brisbane shows promise

Wednesday, December 05, 2012

The prices of Brisbane apartments increased by 2.3% over November to a median of $360,000, in contrast to a flat capital city housing market, according to the latest monthly update by RP Data-Rismark.

The gain over November means that Brisbane unit prices are now down just 0.8% year-on-year, delivering investors a total year-on-year return of 4.9%.

Brisbane unit investors are getting the second best rental return (alongside investors in Canberra units) across the eight capital cities, with a yield of 5.5%, with only Darwin higher at 6.6%.

The RP Data-Rismark November index shows the eight capital city dwelling prices unchanged at a median of $472,500 – following 1% decline in October – with Canberra (1.3%), Darwin (1.1%) and Darwin (1%) the only capital city markets to record dwelling prices rises of 1% or more.

 

The largest capital gains were found in Darwin (3.1%), Perth (3.0%), Brisbane (0.8%) and Sydney (0.6%).

The only cities where values were down over the three months ending November were Canberra and Melbourne (both -0.7%) and Hobart (-4.5%). 

Melbourne was the weakest capital city housing market over the month and the only to register a decline in its median prices, which fell 1% to a median of $486,000 while dwelling prices were unchanged in Sydney at $555,000.

Click to enlarge

Year-on-year, dwelling prices are virtually unchanged, indicating a housing market that continues to tread water, but with notable diversion in performance at an individual city level.

Darwin has been the strongest performer with total returns (capital growth plus rental returns) of 20%, followed by Perth (8%), Sydney (5.9%), Brisbane (5.1%) and Canberra (4.9%).

Gladstone's affordability

Wednesday, December 05, 2012

Gladstone's comparable affordability -

Gladstone's $455,000 median price put the reional Queensland coastal town among the more affordable of mining town investment options, according to Ray White Real Estate director Andrew Allen.

"Compared to the cost of housing in other mining and industry towns, such as Moranbah which is about $700,000-$800,000 for a home, it is certainly more affordable than that," Mr Allen suggested.

Andrew Allen told the Gladstone Observer there was an income gap within the district.

House prices in the Queensland’s mining town of Gladstone fell 4.2% over the September quarter, but are not indicative of a softening in the market, according to the Real Estate Institute of Queensland.

The 4.2% drop to a median $455,000 was recorded from just 19 sales.

Data for 12 months of sales show the median house price has risen by 13.1% to $475,000.

New projects include residential developer Devine Limited launching a new $1.4 billion master-planned community - Riverstone Rise - in Gladstone in April, which is expected to have 2,900 homes upon completion.

Gladstone is located 100 kilometres south of Rockhampton and has a vast number of liquefied natural gas (LNG) and coal projects in development.

The residential area of Gladstone is made up of nine suburbs: Clinton, Glen Eden, Kin Kora, New Auckland, South Gladstone, Sun Valley, Telina, Toolooa and West Gladstone.

RBA Rate cut

Wednesday, December 05, 2012
The RBA has given homeowners more good news – with the RBA announcing today that they will reduce the cash rate by 0.25 points to an overall rate of 3.00%. This equals the lowest level ever for Australian homeowners and has come about due to a multitude of factors which highlight that not only Australian growth but global growth is also slowing. The Organisation for Economic Co-operation and Development (OECD) predicts that Australian growth will slow by 0.7% next year compared with figures this year.

Regional towns a budget property investment option but avoid one-industry mining towns

Friday, November 23, 2012

Property investors with small budgets should consider investing in larger regional towns where prices are more affordable, but “avoid one-industry conurbations such as mining or resort towns” according to investment advisor Monique Sasson Wakelin.

In her latest blog post, Monique Sasson Wakelin says a regional town investment may be an option for prospective investors whose budgets don’t stretch to the $350,000 threshold that will buy “an entry level investment grade one bedroom apartment in an inner suburb of most of our capital cities, with a little more required in Melbourne and a fair amount more in Sydney”.

She says investors should consider regional cities that have a larger population and a diverse range of economic activity.

Sasson Wakelin says good regional options for budget-conscious investors are Newcastle and Wollongong in NSW and Geelong, Ballarat, and Bendigo in Victoria.

However, there are risks with investing in regional towns while the returns may not match those attainable in the bigger capital city markets.

“Be aware that due to the compromise in location, you are unlikely to attain the capital growth in a regional city that you can expect from the capital,” says Sasson Wakelin.

“The aim should therefore be to pay off debt quickly. With the acquired equity, you can then use this first property as a stepping stone into a capital city market.”

Investors should focus on property close to the town’s CBD, often within 1 kilometre of centre.

“A word of warning. It is much easier to pick a quality asset in a capital city than in a regional centre.

“Follow the fundamentals for inner suburban investment and the risk is low. An investment in a regional town is far more problematic,” she says.

 

Larry Schlesinger

Self-managed super funds urged to be cautious with property investments (ATO)

Friday, November 23, 2012

The ATO today warned trustees of self-managed superannuation funds (SMSFs) to be cautious when investing in property.

Acting Commissioner Bruce Quigley said he is concerned people are using their SMSF to invest in property without fully understanding their obligations under the law or some people are seeking to take advantage of certain types of arrangements.

Mr Quigley acknowledged that investing in property can be a confusing area for some people.

"We have observed that some arrangements are deliberately entered into to get around the law, which can result in the fund's trustees being disqualified, facing civil penalties or even facing criminal charges. Those marketing properties to SMSF trustees as part of such arrangements could be referred to Australian Security and Investment Commission (ASIC)."

"The fine details are important and trustees need to be sure that property is the right investment for their SMSF and that the arrangement is legal,"

"We have also seen instances where holding trusts have not even been established at the time the contracts to acquire are signed. In other instances the title of the property is held in the individual's name rather than the trustee of the holding trust. Another common mistake is gearing in a related unit trust, which is not allowed under the law," Mr Quigley said.

"Some of these arrangements, if structured incorrectly, cannot simply be restructured or rectified. The only option may be to unwind the arrangement which could involve forced sale of assets at an inconvenient time. This could be very expensive for the fund with potential stamp duty and tax consequences."

"I urge trustees to get reliable, independent advice when making investment decisions and to obtain advice from us if they are contemplating entering into these sorts of arrangements. The responsibility for ensuring their SMSF complies with the law rests with them."

The upshot of this advice is to ensure you are getting reliable advice from specialist SMSF Advisors and Accountants who are experieced in assisting clients buy property through an SMSF. www.wfscanberra.com.au can assist.

Unlock your wealth - free workshop

Friday, November 16, 2012
Tomorrow a group of us financial 'so called' gurus are running an all day wealth workshop.  Tickets were $249, now reduced to $39 and I can get 50 people in for free.  Link is To Learn more click here
http://www.unlockyourwealth.com.au/?repxa=cOml5wFoG0+W1WtC5DDIiA==
If any of you want to come - please contact me directly rather than book on the site. Or turn up to Ainsle Football club 8.45am tomorrow.
Really beneficial day if you are free tomorrow.

Housing Price Growth to continue

Wednesday, November 14, 2012

We are returning to moderate housing price growth, but no bubble: Terry Ryder

Talk is cheap because supply exceeds demand.

The cheapest talk comes from economists speaking about real estate, because supply (endless) is hugely in excess of demand (zero). There’s also a low price on the articles of most journalists about property because the demand is for a David Jones product but most of the supply is coming from Gone Bonkers.

So, after two years of price decline or stagnation in our major cities, at the first sign of price recovery they’re out there talking up a bubble.

Yes siree, if you crave a bit of media limelight the shortest route is to contact a lazy journalist and give them a sound byte with the word “bubble” in it.

Data from the various research sources indicates we’ve had three or four months in which the average result across the state and territory capital cities has been a rise in median prices.

I’m not sure how reliable the data is, because organisations like RP Data are so desperate to be first with the news that they’ve been calling the monthly price movement on the last day of the month, something that’s difficult to do credibly. Indeed, this week RP Data declared the October price movement 10 days before the end of the month. Is the need for publicity really that desperate?

Nevertheless, the trend evident in the figures from various research sources is one of big-city prices now starting to trend north, slowly.

Further to that, a number of forecasters are predicting rising prices in the near future. BIS Shrapnel is tipping growth in all eight state and territory capitals in the next three years, with the strongest to be in PerthBrisbaneSydney and Darwin, where the rises are expected to be solid but not spectacular.

National Australia Bank published its survey of Australian property professionals, most of whom are expecting moderate growth in the next 12 months.

So we appear to have a return to price growth, though small, with the prospect of more moderate rises.

But there’s no middle ground with media. It’s either boom or bust. Now it seems even the smallest rise in house prices instantly has the label “bubble” slapped on it. Alternatively, a cut in interest rates gives rise to fears of a bubble.

David Uren, who writes about economics for The Australian, recently tried to link fears of a house price boom in Australia into an incoherent rave about inflation and global financial instability. Some fairly innocuous remarks by business leaders have been portrayed by journalists as fears about a bubble, when the people quoted never used that terminology.

Bubble talk has been around for the past five years. It started when a metropolitan newspaper journalist misquoted RBA governor Glenn Stevens and the mistake was repeated as fact by media outlets around the country. Economists and journalists have been promoting bubble talk ever since, although Stevens never said the words reported. It wasn’t merely a beat-up – it was a lie.

I’m still waiting for someone who subscribes to the bubble theory to actually define it. So far, nobody has. The term implies that something has been over-inflated and will burst.

Despite all those dire predictions about a collapse in our home prices since 2007, mostly from publicity-seekers based overseas, the forecast implosion hasn’t happened.

So why are we talking about a bubble now, when capital city prices have barely budged after two years of mediocrity? Because we’re beset with writers and commentators who are shallow, lazy and like the sound of their own voices.

Terry Ryder

How can you tell if a property deal is dodgy

Wednesday, November 14, 2012
How can you tell if a deal is dodgy? You can’t, but here are some clues:

 

  • If there is a middleman between you and the supplier (excluding standard real estate sales), then there is going to be big commissions built in. While the property may be OK, the commissions usually run from around $15,000 up to $40,000. You won’t know about it, as it’s often provided as an after-sales “kick-back” and it doesn’t have to be disclosed – there is no law around property investment advice, and so no disclosure requirement. Such a big commission will, in this subdued environment, take years to recoup and put a dampener on leveraging ability.
  • If the property exists in a state other than where it is being marketed, there has to be a reason why the locals haven’t snapped up the deal.
  • If the person advising you to buy the property is also representing the seller then it is not possible for their advice to be independent – it is biased, and the deal is likely better for the marketer than it is for you.
  • If the company selling the property waxes lyrically about how you are their first concern, it’s likely to be dodgy. It’s fine to sell property as a middleman but not fine to claim that your interests are with the buyer.
  • If there is any kind of incentive scheme, such as a rent guarantee or bonus, something is likely to be up. Property that makes a viable investment can sell itself.

Now is the time to take extra care. If you’d like to invest in property, you can do so safely, but you have to have your eyes open and take responsibility for your own successes and failures. Protect yourself with the following guidelines:

  • Beware of property being marketed by a seminar or telemarketer – such campaigns are expensive, and these people are paid big commissions that are hard to recoup through capital appreciation. Don’t believe claims that commissions aren’t built into the price – this is simply not possible.
  • Never sign a deal on the day you see it. If an extra incentive is offered to do so, be doubly wary!
  • Always confirm the value of a property through recent sales. Only recent sales can determine the actual value.
  • Be aware that forecasts on income are based on historical figures and do not consider future supply.
  • Be extra careful of off-the-plan – especially tax advantaged ones. They are often part of a huge development which will affect future supply and impact on your yields.

Most importantly, become educated before you become an investor. Too many people decide to invest and then go looking for a property, and this is why they are so vulnerable. Get that education under your belt first and then you will know how to spot a dodgy deal at 10 paces.

Margaret Lomas

Perth as a Standout in September

Wednesday, November 14, 2012

By Larry Schlesinger
Tuesday, 06 November 2012

Capital city house price growth slowed in the September quarter to 0.3%, led by a 1.8% rise in Perth's house price index to a median of $489,000, according to preliminary figures from the ABS.

If past revision history is anything to go by, Perth house prices are likely to be revised upwards in the December quarterly update, which is released in February.

The ABS revised its Perth June quarter result upwards from 0.6% to 1.2%, with Perth house prices now up 4.4% for the year to September.

The preliminary estimate for Perth follows rises in the previous three quarters (+0.5%, +0.9% and +1.2%), with the rise in the September quarter 2012 “driven by clusters with median prices below $700,000”.

Recently released RP Data-Rismark figures (which are not revised) show Perth house prices up 0.9% for the October quarter and up 3.8% year-on-year to a median of $475,000.

The ABS 0.3% rise for to the weighted average of the eight capital cities follows the previously reported June quarter increase of 0.5% being revised upwards to 0.6%.

As a consequence, the through-the-year movement has been revised from an estimated fall of 2.1% to an estimated fall of 1.9%.

Sydney also recorded an increase of 0.3% to $605,000, following falls in the previous two quarters.

Sydney house prices are 1.3% for the first nine months of the year, with the ABS noting that the small September quarter gain was driven by “clusters with median prices at the top and bottom of the range of prices.

“These rises were offset by falls in clusters with median prices between $650,000 and $1 million."

Melbourne’s house price index rose 0.2% to $468,000, the first rise in six quarters, to leave house prices down 2.3% for the year to September.

Brisbane house prices gained 0.4% to $434,000, while Hobart was up 0.2% to $348,000.

These rises was partially offset by falls in Adelaide (-0.6% to $384,000), Canberra (-1.1% to $535,000) and Darwin (-0.5% to $547,000).

The ABS also made revisions to capital city data for both June (first revision) and March (second and final revision) quarters

In June: Sydney (+1.5%, revised from +1.4%), Perth (+1.2%, revised from +0.6%), Adelaide (+0.4%, revised from +0.5%) and Darwin (+2.5%, revised from +5.1%). This was partially offset by falls in Melbourne (-0.2%, revised from -0.4%), Canberra (-1.2%, revised from -1.3%), Brisbane (-0.2%, revised from +0.1%) and Hobart (-1.0%, revised from -0.4%).

Final price indexes for the March quarter 2012 show no movement following a revision from a second preliminary estimated fall of 0.1%.

The movement through the year to the March quarter 2012 was revised from a fall of 3.5% to a fall of 3.4%.

In March the following second revisions were made: Perth (+0.9%, revised from +0.7%), Canberra (+0.7%, revised from +0.3%), Melbourne (-1.1%, revised from -1.3%), Adelaide (-0.9%, revised from -1.2%), Hobart (-2.9%, revised from -2.0%).

Property Recovery still well underway

Wednesday, November 14, 2012

Well, that was quick, wasn't it? Almost before it got started, the real estate recovery is over. Dead. Finito. No more recovery.

It echoes the mining boom. That's finished, too. The $300 million in resources developments under way are a figment of someone's imagination.

Just as the rise in lending for home purchases, with first-home buyer loans up 18% on last year, must be a mirage. The significant rises in residential rents in multiple locations I read about must have been a misprint. The improvement in clearance rates was clearly a dream and the gradual improvement in city prices from other sources a fabrication.

None of that counts because one month's figures from one careless research source found a small decline. On that flimsy basis, media organisations around the nation declared the market recovery over. Not a hiccup or a blip, but dead and buried.

AAP declared that the market had dropped because the impact of interest rate cuts had ended. This was roughly four weeks after the October reduction by the Reserve Bank and two to three weeks after the response of most lenders. I'm sure RBA board members would fascinated to learn that the impact of its rates decisions lasts only a matter of days.

There were many similar stories. The journalists who wrote those articles and keyed in those headlines should be ashamed, but I'm sure they're not. It would require a concern for accuracy, fairness and balance – a basic sense of professional decency – to have any remorse over a presentation of news that made a mockery of analysis and added to the great overwhelming pile of misinformation that's afflicting real estate consumers.

Why happens if the next month's figures come out and show a small rise in property prices? What stunningly inappropriate headlines will accompany that news? "Market in miracle rebound"? "Skyrocketing prices defy downturn."? "Economists warn of price bubble"? "US analyst predicts price crash"? "Sub-editor's brain explodes trying to dream up new superlative"?

Anyone who's been around real estate longer than five minutes knows sales data is never smooth or consistent. It's common to access data from four different sources about one location and get four conflicting answers.

One month's data from one source is meaningless.

To place such a categorical conclusion on a single month's figures from just one source - particularly a source that's so desperate to get into print that it's become careless – is irresponsible.

It's the reason newspapers are dying a long, slow, agonising death. Low standards, inexpert writers, cheap sensationalism.

Sadly, some of the new forms of media present as little better.

What's really happening in capital city markets? Nothing much has changed – there is a gradual, almost grudging, recovery underway in most cities, an event supported by most of the data coming in from multiple sources.

The markets in Perth and Darwin are rising strongly and investors thinking of buying need to get busy. Sydney and Brisbane are also trending in the right direction. Adelaide, Canberra and Melbourne are still patchy, with conflicting data from various research sources.

Outside the big cities many regional centres have had strong markets for some time, headed by Gladstone, Mackay and Emerald in Queensland.

The general trend is a return to growth, though moderate in most cases, notwithstanding one dodgy set of figures.

Terry Ryder is the founder of hotspotting.com.au and can be followed on Twitter.


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